A Geometrical Approach to Giffen Behavior: The Epstein and Spiegel Utility Function Revisited

Weber (The Manchester School, Vol. 69 (2001), No. 6, pp. 616–622) has asserted that if we treat the production function of Epstein and Spiegel (The Manchester School, Vol. 68 (2000), No. 5, pp. 503–515) as a utility function, then an inferior good exhibits Giffen behavior at certain prices and income levels. This paper shows that it is not correct. Furthermore, we develop a geometrical method (i) to identify a region in a consumption set where Giffen behavior appears, (ii) to show that Giffen behavior can be categorized into two types: ‘subsistence‐driven’ and ‘satiation‐driven’, and (iii) to present a new class of Giffen utility functions.